If there is a non-economic risk, it comes down to the U.S. dollar, and Nouriel Roubini is probably onto something in the sense that it has become a huge ‘carry trade’ vehicle for all risky assets. Historically, there is no correlation at all between the DXY index (the U.S. dollar index) and the S&P 500. In the past eight months, that correlation is 90%.

Finally there’s a pair of funds which specifically seek to replicate the carry trade — the PowerShares G10 Currency Harvest fund (NYSEARCA:DBV), and the iPath Optimized Currency Carry fund (NYSEARCA:ICI). Both of them use futures to capture the full local-currency returns: they’re true carry-trade plays.

NEW YORK -- Demand for the three-month Treasury bill is ramping up as investors seeking protection toward end of the year stock up on the safest securities. At a time when Treasury bills are in short supply, the situation is driving the bond equivalent yield on the three-month T-bill down. Strategists said its yield is likely to fall into negative territory before the end of the year. When market participants buy Treasury bills at negative rates, they're essentially paying the

A V-shape recovery might be visible in Q3 private consumption rates, which grew a healthy 3.4%, in line with consumption rates before the crisis. But this was just a head-fake, according to Roubini, thanks to cash-for-clunker type programs and home buyer tax credits. He thinks consumption will now slow, growing at just 1.8% in 2010.

“The banks are still grossly overvalued,” Whitney said today in an interview on Bloomberg Radio. “People are expecting something great to happen in 2010 and I think they are going to be severely disappointed.”

ETFDesk users see this as a potential opportunity to: sellSPDR-Financial;

The Fed is trying to reflate the U.S. economy. The process of reflation involves lowering short-term rates to such a painful level that investors are forced or enticed to term out their short-term cash into higher-risk bonds or stocks. Once your cash has recapitalized and revitalized corporate America and homeowners, well, then the Fed will start to be concerned about inflation – not until.